Government’s Pre-Litigation Conduct Cannot Justify a Court of Claims Fee Award

| Makoto Tsunozaki, Ph.D.Mark Kachner


Before Dyk, Wallach, and Chen. Appeal from the United States Court of Federal Claims.

Summary: A Court of Claims fee award under 28 U.S.C. § 1498(a), turns on whether the government’s litigation conduct was substantially justified without regard to its pre-litigation conduct.

The Court of Claims found the Navy’s development of certain ship models infringed two FastShip patents. The Court of Claims then awarded $6 million in fees under 28 U.S.C. § 1498(a), finding the government’s conduct, before and during litigation taken “as a whole,” was not substantially justified. The Claims Court faulted the government for failing to award FastShip a contract after it responded to a request for proposals and discussed potential ship designs with government contractors under confidentiality agreements. The Claims Court also found the Navy took an “exceedingly long time” to act on FastShip’s administrative claim that FastShip had initially filed before bringing its Complaint in the Claims Court.

The Federal Circuit vacated the fee award. It held that the relevant conduct for determining whether to award fees does not include “the act of infringement itself, any purported breach of contract, or any other underlying governmental action.” The Claims Court could not consider the Navy’s conduct during the ship procurement process or during the administrative proceeding. The Federal Circuit vacated the fee award and remanded so the Claims Court could consider whether the government’s litigation conduct alone was sufficient to justify the fee award.

Editor: Paul Stewart